The Art and Science of a Successful Flash Sale Strategy

Many lessons have been learned since the early flash-sale sites of 2004, such as Woot. Retailers know that a deep discounting methodology cannot stand on its own as the core to a business model. They need practical, logical reasons and uses for flash selling, along with a well thought out plan.

It’s essential to understand the characteristics of how flash sales are used effectively by retailers, as well as the mistakes to avoid. How data analysis, preparation and automation contribute to running a successful flash sale, preserving not only your margins and profitability, but your reputation and relationship with customers.

There are two primary instances when retailers most effectively use flash selling, and a few key ways to do it right.

FOMO: Introduce an exclusive, niche product with a limited release not only in quantity but for a limited time, the latter of which is a key feature within a flash-sales model. This creates excitement for the product line and brand, as consumers clamber to get their hands on highly coveted merchandise.

Clearing stock: You have a few high-value products that have been in inventory longer than you would like. Because they may be seasonal or speciality, moving them out may also be challenging. Using flash selling, along with a coordinated promotion, is a great way to clear out stock and make room for fresh, in-demand products.

The Science: Automation’s Role

Retailers today have a myriad of tools available to help them make strategic decisions about their business and operate more efficiently with fewer resources. For example, automation has enabled the design and fine-tuning of custom workflows to manage order processing, update inventory in real time, assign shipping and keep customers updated about order status. Automation reduces human error, processing latencies and labor costs, enabling retailers to instead allocate resources toward developing marketing and sales strategies that grow their businesses.

If your goal is to use a flash sale to attract new customers and increase loyalty, be sure to have the right numbers and processes in place. Real-time inventory reporting will tell you which products are available for immediate shipment across all channels and locations, as well as their profit margins, so that you can.make the right decision about which products to feature in the sale. Errors in stock levels prevent order fulfillment, which can lead to the opposite effect: customers tend to take out their grievances online (i.e., social media).

When the sale is active and new orders begin streaming in, automation takes over to expedite each order so it’s quickly processed and shipped. The customer is sent live delivery updates and is thrilled. First impressions are everything, especially in the era of Amazon Prime.

Successful flash sales can more than double sales orders in a short amount of time. Automation does the heavy lifting of workflow processing, so your business can efficiently manage this spike without increasing staff, even seasonally.

More Science: Smart Data Analysis and Design

A review of your sales, inventory and returns reports pulled from your retail management system will provide the data intelligence that enable you to make smart business decisions. For example, you may learn that the website or a certain store isn’t meeting its sales goals, that a specialized product line isn’t turning over as quickly as it did two quarters prior, or that customer lifetime value ratios (CLTV) are flat.

Other data sources, such as Google Analytics, show how you rank compared to your competition on certain product lines. Review their price points and run conversion reporting (i.e., purchases divided by product page visits) to determine if a flash sale is the right choice to recapture customers, or if a more long-term sales and pricing adjustment is needed.

Once you’ve picked the products and prices, conduct a review of your returns data before readying your email campaign. It’s become common for shoppers to deliberately overpurchase and return unwanted items, so it’s wise to filter those customers with high return ratios from your flash sale email list.

Furthermore, if you choose to promote your sale on social media, keep in mind that it’s open season in terms of who could partake in the campaign — which leads to the “art” of flash sale success …

The Art: Take Charge of Policies

Online shoppers have become accustomed to a separate set of policies for flash sales vs a regular sale, so it’s not a deterrent to establish guidelines and restrictions. Consider a no-returns policy or providing two-day delivery, but not free shipping. Design the rules for your benefit, keeping the customer in mind.

If your business hasn't yet run a flash sale, as with any new business endeavor, start small. Run a mini flash sale of just a few products for a short period of time. Then run the numbers — sales revenue, website visits, conversions, along with abandoned cart rates and profitability in the areas of upselling and cross-selling.

When executed properly, with forethought and planning, flash sales ultimately benefit both the buyer and the seller. Using your data empowers you to design the right flash sales strategy for your business, and automation can turn David into Goliath, easily managing a burst in sales and order shipments with minimal effort.

Derek O’Carroll is CEO of Brightpearl, an omnichannel retail management system that helps retailers automate back-office functions and become more efficient.

Derek O'Carroll is CEO of Brightpearl, a cloud-based ERP for retailers and wholesalers. Recognized as a leading retail expert, his mantra is to deliver on Brightpearl’s mission to automate the back office for today’s merchants.